Saturday, November 15, 2008

Cebu Pacific reports 174% decline in profits, but plans to increase passenger base to 7 million

CEBU AIR, Inc., operator of budget airline Cebu Pacific, posted a 174% decline in profits from January to September this year, citing high oil prices and the appreciation of dollar-denominated loans.

In a disclosure to the local exchange, Cebu Pacific’s holding firm, JG Summit Holdings, Inc. said the airline had lost P1.87 billion in the nine month period — a turnaround from the P2.53 billion profit the company made in the same period last year.

"[These losses were] due to higher operations-related expenses, particularly, fuel cost which posted a 96% increase" to P6.53 billion this year from P3.33 billion last year, the parent firm said.

Jet fuel prices peaked at $180 per barrel in July, or near double its price from a year ago.

Today however, jet fuel, which is more expensive than regular gasoline, has gone down to $84 per barrel, or just under 20% lower than its price a year ago.

"Cebu Pacific recognized a foreign exchange loss from its dollar denominated obligations amounting to P1.57 billion during the period compared to a foreign exchange gain of P1.06 billion recorded last year," the company said.

Excluding the foreign exchange and mark-to-market effect, the airline would have posted a net income of P187.71 million for the nine months.

The airline’s costs and operating expenses went up 47.33% in the nine-month period, to P13.23 billion from just under P9 billion last year.

The airline posted a 28.3% increase in revenues for the nine-month period to close to P14 billion, from just under P11 billion in the same period last year, "brought about by additional routes and flights."

The company is looking to grow its passenger base to 7 million passengers a year by the end of 2008, from the five million passengers it carried all of last year.

The Gokongwei-led carrier plans to do this by expanding to more routes and fielding a total of six aircraft — four 72-seater ATR Turboprops and two 180-seater Airbus 320s — which the company expects to be delivered next year. 

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